Member Sign In

You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.

If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.

Tiffany Upgraded to Neutral

On Apr 9, we upgraded our recommendation on Tiffany & Company (TIF - Free Report) , the designer, manufacturer and retailer of fine jewelry, to Neutral, following better-than-expected fourth-quarter fiscal 2012 results attributable to a surge in demand in the Asia-Pacific region. The company also currently retains a Zacks Rank #3 (Hold).

Why the Upgrade?

After four straight quarters of negative earnings surprises, Tiffany delivered a positive surprise on Mar 22, wherein earnings of $1.40 per share surpassed the Zacks Consensus Estimate of $1.37 by 2.2%, and rose marginally by 0.7% from the prior-year quarter.

Tiffany’s net sales of $1,235.8 million climbed 4% from the year-ago quarter, on the heels of healthy performance of stores in the Americas, Asia-Pacific and Europe regions and due to new collection launches.

We believe Tiffany is well positioned to support robust sales and earnings growth in the long run by leveraging on capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes. Moreover, with nearly half of the total sales generated internationally, we believe that the company is well diversified from a regional perspective as well.

Tiffany remains committed to attain long-term objectives of at least 15% earnings growth and a 10% to 12% sales increase annually. Management now projects earnings per share to mark an increase of 6% to 9% and total net sales growth of 6% to 8% in fiscal 2013.

However, the near-term concern on the stock that keeps us on the sidelines is its shrinking gross margin that is weighing upon its bottom-line performance. Tiffany registered a contraction of 130 basis points in gross margin of 59.1% during the fourth quarter.

Management anticipates fiscal 2013 gross margin to be modestly lower than the previous year due to a shift in product sales mix toward higher priced categories carrying lower margin. Consequently, due to gross margin pressure and increase in marketing costs, the company forecasted a decline of 15% – 20% in net earnings from operations during the first quarter of fiscal 2013.

Resources

Client Support

Follow Us

Zacks Research is Reported On:

Yahoo

MSN

Marketwatch

Nasdaq

Forbes

Investors.com

Morningstar

Zacks Investment Research is an A+ Rated BBB Accredited Business.

Copyright 2016 Zacks Investment Research

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1988-2015 and were examined and attested by Baker Tilly Virchow Krause, LLP, an independent accounting firm.

Visit performance for information about the performance numbers displayed above.